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Mercedes concept car at the Canadian International Auto Show (Frank Gunn/THE CANADIAN PRESS)
Mercedes concept car at the Canadian International Auto Show (Frank Gunn/THE CANADIAN PRESS)

Driving It Home

German auto makers still own the luxury market Add to ...

Themes. The other night, just prior to the opening of the Toronto auto show, I was talking with auto analyst Dennis DesRosiers about the themes you’ll come across this year as you wander the floor of what is officially called the Canadian International Auto Show.

Dennis is a very smart guy, he’s passionate about the car business and while we don’t always agree, it’s not because he’s not thought through the issues. He knows his stuff. Here is a big one worth considering – luxury cars. I’ll dig into a couple of others in the next few days.

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So luxury cars. The Germans own this segment and this year you can expect Audi, BMW and Mercedes-Benz and Porsche to combine for sales of about 100,000. They own the segment for a bunch of reasons:

First, they do a far, far better job of offering a wide range of models than the Japanese, Korean and American car companies. BMW, for instance, offers some 55 different models and variants if you include its Mini brand. Each German luxury brand also has a very good retail distribution network – their own stand-alone stores. There, they are able to define their brands through not only the vehicles on the showroom floors, but also through premium customer service.

The point is, you buy a BMW at a BMW store. An Audi at an Audi store. A Mercedes at a Mercedes store. And Porsche at a Porsche store. Standalone stores allow each to control the products and the brand messaging and experience. That is hugely important to buyers who are spending more than the average for not just a “transportation appliance,” but all that is represents in terms of image and prestige and customer treatment.

Now the Japanese here, Acura, Lexus and Infiniti, do have standalone retailers, but there’s a hiccup: for the most part, all three base their lineups on vehicle architectures borrowed and adapted, and yes improved, from their mainstream models. An Infiniti JX is based on the Nissan Pathfinder, for instance. A Lexus ES is based on the Toyota Camry. An Acura TSX is essentially the Honda Accord in Europe. And so on.

It’s true that Audis are based on shared Volkswagen Group platforms, but Audi does an exceptional job of taking basic mechanical bits and pieces and transforming them into unique Audi models. Audi also has its own assembly plants, design facilities and engineering centres. The VW Group is the world’s standard in platform sharing and Audi is the standard in how to turn a mainstream architecture into a premium vehicle and charge accordingly.

This brings me to the Americans, the Detroit-based companies. We can write off Chrysler here; the Chrysler Group may have some sorta upscale vehicles – the Chrysler 300, Jeep Grand Cherokee – but we can’t really in all fairness call any part of Chrysler a luxury or premium brand. Not yet, at least.

Ford? Ford is in the very, very early stages of a big push with its Lincoln brand. You might have seen the Lincoln Motor Company advertising starting to unfold in Canada, as it has already been done in the U.S. New Lincoln models are coming, such as the MKZ. And the Lincoln side of Ford’s stores in Canada are being fixed up to reflect and deliver a premium customer experience.

I’ve yet to visit one of these new shop-in-shop Lincoln dealerships, but will soon. I want to see how Lincoln can be special at a dealership where just a few paces away you can also buy a Ford Fiesta compact and an F-Series pickup. I would have liked to have seen Ford of Canada establish standalone Lincoln stores, but that’s not going to happen. The question is: if Audi, BMW, Mercedes and Porsche can make the economics of standalone retailers work, why can’t Ford do that with Lincoln?

The same holds true for General Motors’ Cadillac brand. The newest Caddy vehicles I’ve seen and driven, the ATS and XTS, are really good cars. The ATS is a fantastic car. But like Lincolns and Cadillacs, are sold out of GM Canada dealerships where you can also buy a Chevrolet Spark and a GMC Sierra pickup. The “premium” or “luxury” experience is limited by the retail network. Why can’t GM of Canada do standalone Caddy stores?

Something to think about as you check out the expensive vehicles at the Toronto show.

For more Toronto AutoShow coverage, please click here.

Follow on Twitter: @catocarguy

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